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Why the Minimum Wage Is Everyone’s Problem

Topics: Data & Research
minimum wage

You might think that just because you’re educated and trained, you’ll automatically get a job that pays well. What plenty of evidence, including our own PayScale Salary Survey, can show you is that it simply isn’t always the case. A lot of skilled professionals make salaries that are barely above minimum wage in some areas.

A few years ago, a paramedic named Jens Rushing took to Facebook to talk about the struggle to get paid what you’re worth. The subject came up because fast food workers in New York City were striking in order to get paid $15 an hour. The current federal minimum wage is $7.25 (and has been since it was set there in 2009). Here’s the problem, as Rushing puts it:

Look, if any job is going to take up someone’s life, it deserves a living wage. If a job exists and you have to hire someone to do it, they deserve a living wage. End of story.

“Fighting Over Who Has the Bigger Pile of Crumbs”

Rushing argued that it was unproductive to fight over fast food workers getting paid the same salary that he himself earned as a paramedic.

“They want us fighting over who has the bigger pile of crumbs so we don’t realize they made off with almost the whole damn cake,” he wrote. “Why are you angry about fast food workers making two bucks more an hour when your CEO makes four hundred TIMES what you do?”

And it’s pretty crazy, when you think about it. The federal minimum wage at just $7.25 earns a full-time worker only $15,080 per year. According to the Center for Poverty Research at UC Davis, there are 29 states that set their own minimum wages above that amount. If you think that $15,000 per year sounds like not a lot of money, you’d be right, especially when you think of a worker as the sole or primary breadwinner for a family.

Do You Know What You're Worth?

According to the Center for Poverty Research, “Whether full-time work at minimum wage keeps a worker out of poverty depends on their family size and whether others in the household work. Someone who works full time for minimum wage and lives alone will earn above their poverty threshold. For single parents who work minimum wage, however, staying above poverty can be particularly challenging, even with full-time work.”

That has real costs for the economy, and that affects everyone, not just low-income earners. A 2014 report found that low-wage earners at Walmart, for example, “cost U.S. taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing” during the previous year, per Forbes.

Cost-of-Living Factors In

Naturally, having a family and living in a major city can complicate that equation even more. Even if the minimum wage is raised to $15 per hour, a person working a 40-hour per week job will earn $31,200 per year. Recent studies show that to live comfortably in large cities around the country, a person needs to be making much more than just minimum wage. According to SmartAsset, which crunched numbers from the U.S. Department of Housing and Urban Development in 2016, to afford a two-bedroom apartment in San Francisco, a person (or family) would need to bring in $216,129 to live there without spending more than 30 percent of their income on housing. In Boston, that number is $59,143. In Washington, DC, it’s $119,271. Even in Phoenix, you’d need $49,800 per year.

In fact, a recent study published by the National Low Income Housing Coalition found that two-bedroom apartments are completely out of reach for those earning the federal minimum wage. And the study also found that those earning $7.25 per hour could comfortably afford just a one-bedroom in only 12 counties (mostly rural) in the United States. That’s appalling. The Guardian wrote about the study and noted, “Averaging rents across Alabama and Montana, someone earning minimum wage would have to work approximately one-and-a-half full-time jobs to be able to afford a one-bedroom home.”

So yes, the minimum wage matters. If we’re “fighting for the crumbs,” as Rushing says, we’re not focusing on the real problems. If you think you can get by on $15,000 a year, then I guess that’s all right, but the grand majority of Americans just can’t. And that affects everyone.

Tell Us What You Think!

How do you feel about the current minimum wage? Comment below or join the discussion on Twitter!

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Sharipeter schiff Recent comment authors
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Cost of Labor is a more valuable comparison. Most compensation professionals will scoff at someone who uses cost of living to make a point like this one.

peter schiff
peter schiff

What is your point here? That a family can’t live comfortable in an expensive city with a single bead winner earning just minimum wage. Of course, nor should anyone expect unskilled labor to deliver enough compensation to make that possible. Forcing up the minimum wage will simply destroy low-skilled entry level jobs that may one day lead to the type of higher-skilled, more productive jobs, that will provide incomes high enough to support a family in comfort. But you don’t… Read more »

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